The move, which had been expected, reflects the depth of the damage done by the current recession. GM filed for bankruptcy protection on Monday, while Citigroup is in the process of converting preferred shares to common shares in a manner that will leave the government with a 34% ownership stake.

GM had been one of the 30 Dow stocks without interruption for 83 years, since 1925, remaining in the blue-chip average throughout the Depression of the 1930s. The only current Dow component with a longer tenure is
General Electric Co.
GE 0.97%
, which has been a member consistently since 1907.

Citi is a more-recent addition, having joined in 1997. Ironically, Travelers formerly was an insurance arm of Citigroup and was spun off as a separate company in 2002. That company was acquired by St. Paul Cos. in 2004 and the merged entity later took the Travelers name.

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Cisco is taking GM's place in the Dow after the auto maker filed for bankruptcy, and Travelers is replacing Citigroup. Dow Jones Indexes Editor/Executive Director John Prestbo tells WSJ's Matt Phillips the reasons for the changes.

"The parlous state of GM has left us with no choice but to remove it from the Dow. A bankruptcy filing immediately disqualifies a stock regardless of a company's history or its role as a cultural icon," said
Robert Thomson,
managing editor of The Wall Street Journal and editor-in-chief for all of Dow Jones, owned by
News Corp.
NWS 0.54%

"We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake," he added. "We genuinely hope that once the bank has refashioned itself that we will again be able to consider it for inclusion -- Citigroup is a renowned institution, not only in this country, but around the world."

Meanwhile, Standard & Poor's announced that GM also will be removed from the S&P 500-stock index as of Wednesday's trading, to be replaced by education firm
DeVry Inc.

James Bianco,
president of Bianco Research in Chicago, noted that because the Dow changes don't take effect until June 8, the blue-chip average will include for one week a company operating under bankruptcy protection, which hasn't happened in modern times. "It isn't the job of the index committee to worry about whether they are contributing to financial turmoil. It is the job of the index committee to be an accurate reflection of the stock market," Mr. Bianco said.

Mr. Thomson said it is hard to revise an index effectively during a time of market volatility, and that, in some ways, allowing GM and Citi to remain in the Dow was a reflection of the troubles the market was experiencing.

Privately, some Citigroup executives viewed the choice of Travelers, a former unit, as a slap in the face. Officially, a Citigroup spokesperson said: "This has no impact on the company's strategy or our efforts to return Citi to sustained profitability. Citi has strong businesses and good growth prospects."

A GM spokesperson said, "While this is an unfortunate development, it is understandable in light of the tremendous changes occurring at GM as we work to reinvent the company. We remain confident regarding GM's future as a global leader in the automotive industry."

Texaco Inc. remained a component of the Dow Jones Industrial Average while operating under bankruptcy protection in 1987 and 1988. This article incorrectly implied that General Motors Corp., which will be in the Dow until June 8, would be the first company in modern times to remain in the average while operating under bankruptcy protection.

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